Value-based Marketing and Customer Analytics from a Bean Counter's Point of View. A Guest Lecture by Nicolai Andersen
On 23 January 2015 Nicolai Andersen, who heads Deloitte Innovation and Analytics, held a guest lecture about data analytics. The talk was given at the Institute for Value-Based Marketing.
At the beginning of his lecture Andersen highlighted a thesis which sounds simple, but is nonetheless important: size is not a good indicator of intrinsic value. In order to contribute to a company's success, one has to find out what a customer is worth. Yet this is often far from easy. Since nowadays consumers can purchase many products through many different channels, it is virtually impossible for a company to find out how much an individual consumer has purchased. This problem can be resolved with the aid of data analytics. So-called self-organizing maps can be used to recognize and draw inferences from patterns which display certain similarities. Decision-making may be facilitated by the diversity of the data which are currently available.
In order to illustrate the successful use of data analytics, Andersen cited House of Cards, an American television series whose script-writers relied heavily on the analysis of data relating to the US public's favourite TV series and the times when viewers switched on their TV sets. The popularity of House of Cards can be explained by the razor-sharp precision with which the target group was analysed. Online shops use their customers' data in a similar manner in order to place suitable product recommendations.
Nonetheless, Andersen believes that it is an error to devote too much time and money to the analysis of data in cases where additional information will not provide additional insights. Decision-makers do not always require vast quantities of information in order to make the right decisions. A surfeit of data may make it more difficult to find the right solutions. The search for the right solution is sometimes like looking for a needle in a haystack. Adding more hay to the stack will not make the searchers' task any easier.
Questions and Answers
Q: What advice would you give to graduates who are about to enter the world of work?
A: I think the keys to success are openness to new ideas and the pleasure that people derive from their work. When I was a student I was convinced that I'd never work in the finance sector. Now I love finance. Graduates should never accept a post merely because they have beeen offered a high salary or because they are anxious to make their way up the career ladder. People who enjoy their work are more likely to be successful than those who regard their work as drudgery.
Q: What are the challenges faced by marketing specialists in your branch, and what trends have you observed?
A: As far as customer analytics is concerned, Germany lags behind other western countries. There are two reasons for this: the emphasis placed on high-quality engineering and a preoccupation with data protection – a phenomenon which can be partly explained by German history. Germany should continue to invest time and money in information technology so that German companies can take decisions on the basis of facts. Owing to recent developments in fields such as crowdsourcing and artificial intelligence, we'll have to learn how to run companies more efficiently. Artificial intelligence, for instance, has now been developed to such a high level that computers will one day be able to resolve problems just as well as humans. Unlike humans, however, computers will not make mistakes. There is therefore a very real danger that one day we will be replaced by computers which function better and cost less than human workers.
After studying engineering management at the University of Karlsruhe, Nicolai Andersen was appointed senior consultant at Arthur Andersen. Since 2002 he has been a partner at Deloitte. In this capacity he is responsible for Deloitte Analytics and Deloitte's innovation programme. Working on a cross-disciplinary basis, he assesses the impact of technological, economic and sociological trends on business models, services and products.